[Economic Report of the President (2012)]
[Administration of Barack H. Obama]
[Online through the Government Printing Office, www.gpo.gov]
112th Congress, 2nd Session..................................................H. Doc. 112-77
ECONOMIC REPORT
OF THE
PRESIDENT
TRANSMITTED TO THE CONGRESS
FEBRUARY 2012
TOGETHER WITH
THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS
UNITED STATES GOVERNMENT PRINTING OFFICE
WASHINGTON : 2012
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ISBN 978-0-16-090181-2
CONTENTS
Page
ECONOMIC REPORT OF THE PRESIDENT...................................1
ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS* 7
CHAPTER 1. TO RECOVER, REBALANCE, AND REBUILD..................21
CHAPTER 2. THE YEAR IN REVIEW AND THE YEARD AHEAD..............37
CHAPTER 3. RESTORING FISCAL RESPONSIBILITY.....................81
CHAPTER 4. STABILIZING AND HEALING THE HOUSING MARKET..........99
CHAPTER 5. INTERNATIONAL TRADE AND FINANCE....................129
CHAPTER 6. JOBS AND INCOME:
TODAY AND TOMORROW.................................163
CHAPTER 7. PRESERVING AND MODERNIZING
THE SAFETY NET.....................................197
CHAPTER 8. IMPROVING THE QUALITY OF LIFE THROUGH
SMART REGULATION, INNOVATION, CLEAN
ENERGY, AND PUBLIC INVESTMENT......................231
REFERENCES.......................................................267
APPENDIX A REPORT TO THE PRESIDENT ON THE
ACTIVITIES OF THE COUNCIL OF ECONOMIC
ADVISERS DURING 2011...............................293
APPENDIX B. STATISTICAL TABLES RELATING TO INCOME,
EMPLOYMENT, AND PRODUCTION.........................307
*For a detailed table of contents of the Council's Report, see page 11.
ECONOMIC REPORT
OF THE
PRESIDENT
ECONOMIC REPORT OF THE PRESIDENT
TO THE CONGRESS OF THE UNITED STATES:
One of the fundamental tenets of the American economy has been that
if you work hard, you can do well enough to raise a family, own a
home, send your kids to college, and put a little money away for
retirement. That's the promise of America.
The defining issue of our time is how to keep that promise alive.
We can either settle for a country where a shrinking number of people
do very well while a growing number of Americans barely get by, or we
can restore an economy where everyone gets a fair shot, everyone does
their fair share, and everyone plays by the same set of rules.
Long before the recession that began in December 2007, job growth
was insufficient for our growing population. Manufacturing jobs were
leaving our shores. Technology made businesses more efficient, but
also made some jobs obsolete. The few at the top saw their incomes
rise like never before, but most hardworking Americans struggled with
costs that were growing, paychecks that were not, and personal debt that kept piling up.
In 2008, the house of cards collapsed. We learned that mortgages
had been sold to people who could not afford them or did not
understand them. Banks had made huge bets and doled out big bonuses
with other people's money. Regulators had looked the other way, or
did not have the authority to stop the bad behavior. It was wrong.
It was irresponsible. And it plunged our economy into a crisis that
put millions out of work, saddled us with more debt, and left
innocent, hardworking Americans holding the bag.
In the year before I took office, we lost nearly 5 million
private sector jobs. And we lost almost another 4 million before our policies were in full effect.
Those are the facts. But so are these: In the last 23 months,
businesses have created 3.7 million jobs. Last year, they created
the most jobs since 2005. American manufacturers are hiring again,
creating jobs for the
Economic Report of the President | 3
first time since the late 1990s. And we have put in place new rules to
hold Wall Street accountable, so a crisis like this never happens
again.
Some, however, still advocate going back to the same economic
policies that stacked the deck against middle-class Americans for way
too many years. And their philosophy is simple: We are better off
when everybody is left to fend for themselves and play by their own
rules.
That philosophy is wrong. The more Americans who succeed, the more
America succeeds. These are not Democratic values or Republican
values. They are American values. And we have to reclaim them.
This is a make-or-break moment for the middle class, and for all
those who are working to get into the middle class. It is a moment
when we can go back to the ways of the past�to growing deficits,
stagnant incomes and job growth, declining opportunity, and rising
inequality--or we can make a break from the past. We can build an
economy by restoring our greatest strengths: American manufacturing,
American energy, skills for American workers, and a renewal of
American values--an economy built to last.
When it comes to the deficit, we have already agreed to more than
$2 trillion in cuts and savings. But we need to do more, and that
means making choices. Right now, we are poised to spend nearly $1
trillion more on what was supposed to be a temporary tax break for
the wealthiest 2 percent of Americans. Right now, because of loopholes
and shelters in the tax code, a quarter of all millionaires pay lower
tax rates than millions of middle-class households. I believe that tax
reform should follow the Buffett Rule. If you make more than $1
million a year, you should not pay less than 30 percent in taxes. In
fact, if you are earning a million dollars a year, you should not get
special tax subsidies or deductions. On the other hand, if you make
under $250,000 a year, like 98 percent of American families do, your
taxes should not go up.
Americans know that this generation's success is only possible
because past generations felt a responsibility to each other, and to
the future of their country. Now it is our turn. Now it falls to us to
live up to that same sense of shared responsibility.
This year's Economic Report ofthe President, prepared by the
Council of Economic Advisers, describes the emergency rescue measures
taken to end the recession and support the ongoing recovery, and lays
out a blueprint for an economy built to last. It explains how we are
restoring our strengths as a Nation�our innovative economy, our strong
manufacturing base, and our workers�by investing in the technologies
of the future, in companies that create jobs here in America, and in
education
4 | Economic Report of the President
and training programs that will prepare our workers for the jobs
of tomorrow. We must ensure that these investments benefit everyone
and increase opportunity for all Americans or we risk threatening one
of the features that defines us as a Nation�that America is a country
in which anyone can do well, regardless of how they start out.
No one built this country on their own. This Nation is great
because we built it together. If we remember that truth today, join
together in common purpose, and maintain our common resolve, then I
am as confident as ever that our economic future is hopeful and
strong.
THE WHITE HOUSE
FEBRUARY 2012
Economic Report of the President | 5
THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS
LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS
Washington, D.C., February 17, 2012
MR. PRESIDENT:
The Council of Economic Advisers herewith submits its 2012 Annual
Report in accordance of the Employment Act of 1946 as amended by the
Full Employment and Balanced Growth Act of 1978.
Sincerely,
Alan B. Krueger
Chairman
Katharine G. Abraham
Member
Carl Shapiro
Member